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[FOOD FOR THOUGHT] Is Capital Investment taxed?

Discussion in 'Making Money' started by Q Crypto, Feb 13, 2018.

  1. Q Crypto


    Jan 30, 2018
    Likes Received:
    Let's say an angel investor decides to invest in your startup. I'm curious about few things here:

    1. Is that investment taxed?

    2. If you would start a company with this investment, would that investment count as an income at the and of the year and get taxed?

    3. What happens with that investment if it is not spent by the end of the year?
  2. patriotnews

    patriotnews Supreme Member

    Oct 25, 2015
    Likes Received:
    under there
    I am only speaking for US: Taxed at which end? As the start-up it is accounted for within corporate income taxes. If a C Corp: the company bears the tax burden for profit/loss. If an LLC: the owners have the tax burden for potential profit/loss as a pass-through agent.
    Each has entities that seek these different setups.

    Yes, depending upon the method of incorporation (C/S Corp, LLC) the taxation would be handled differently.

    It is handled as all other revenue not spent. It can be reinvested, it can be paid as a dividend, bonuses. Most of that will be decided at the corporate level with the investor being aware if the money is going to paying people.

    I'll be honest here, not trying to be mean, but if you are asking these questions you'll scare away all legit investors when you start talking with them when terms like depreciation, ROI, carry-over, P&L, IP, and so, so many more get thrown around casually.
    Knowing how to talk the talk is more important to major investors than having knowledge on how to accomplish the task being invested in. I know that sounds silly, but look at it this way: should the captain know how to guide everyone around the iceberg or should they be concerned with how to keep the engines running full steam ahead?

    I'm setting myself up this year for investment into a program & app, but I have 0 idea how to code.